Navigating through the details of a construction contract can seem like reading up on the latest changes the Internal Revenue Service has made to tax law. These documents are heavy in legalese and may be from a preordered, premade form that does not take your specific situation into account. It is important to read these documents over carefully, as certain provisions can cause serious problems for construction projects. These issues can impact the owner, general contractors and subcontractors.
Provisions to Watch Out for in Construction Contracts
Although there are a variety of things to be aware of when reviewing a construction contract, some of the more concerning provisions include:
- No damage for delay. This clause is generally included to benefit the owner. The provision states that the contractor will not receive any financial compensation for a variety of events that could lead to a delay in the project. Instead, the contractor can only receive an extension of time. This can lead to financial burdens for the contractor.
- Contingency payment. This provision is often designed to offer protection to the general contractor. In most cases, the provision states that the subcontractor does not receive payment until the general contractor is paid by the owner. The American Subcontractors Association of California notes that this type of clause was declared "void and unenforceable" in 1997 by California's Supreme Court.
- Protection of work, persons and property. This type of clause can serve to protect both the owner and the general contractor. The provision can take a variety of forms, but generally states that the subcontractor is required to "remedy any loss or damage caused to work, materials, equipment and property" even if the damage was only partially the fault of the subcontractor.
These are just a few of the many provisions that can cause problems for contractors and subcontractors. In addition to keeping an eye out for provisions with similar headings, similar allowances may be provided for in other areas of the contract. As a result, those moving forward with a construction contract are wise to seek the counsel of an experienced construction litigation lawyer.
Importance of Legal Counsel
A construction litigation lawyer can serve your needs before a project begins as well as after an issue arises. Having an attorney review the contract can help you better understand your rights. This legal professional can also negotiate various provisions, helping to tailor the contract to your specific situation. An experienced lawyer can also help defend your rights when facing litigation.